What to Know About the Business of Social Media

Truth About Social Media

A commonly overlooked axiom in Internet culture is the fact that if you can’t figure out what a company is selling, then you’re probably its flagship product. Google, Facebook, and Twitter all provide services that are borderline indispensable, and they do it all for free. How, then, do they make their millions? The answer really shouldn’t surprise us – nor should it be a point of concern. Simply put, they are in the business of social media.

Advertising Gets Social

When YouTube began running ads before videos several years ago, users everywhere were outraged, prompting many to begin thinking that everything they’ve ever loved will eventually be monetized. The concern at the time was perhaps not entirely unjustified, but in the years since, other social sites have begun to integrate ads into the user experience with a touch more artistry.

Facebook’s well-publicized use of personal information to serve ads to its users has now become an inextricable part of the experience. The user backlash, when the extent of Facebook’s data collection practices came to be fully understood, was in some corners justified and in others not a little comical. To think that users would be shocked that Facebook leverages the information that they have freely provided, in order to serve relevant ads, is arguably the most elegant solution the company could have adopted. Facebook isn’t stealing data or using anything that hasn’t already been provided; in turn, users are served ads that are relevant to their interests, instead of ads that have nothing to do with them.

Twitter is also getting better versed in providing ads to its users. A recent case study recently revealed just how powerful the site’s promotion features can really be.

The Syfy Channel’s unexpected hit “Sharknado” owed its nearly shocking success largely to the veritable storm of Tweets that accompanied its release. The question of how to build a business model around Twitter’s virality is still not fully understood, with many seeing Twitter ads as a complement to a traditional television campaign. Still, the success of “Sharknado” has proved that a Twitter campaign could handily stand on its own.

Location-Based Advertisements

With advertisements becoming more closely tied with specific demographics like age, gender and geographic location, it should come as no surprise that social site Foursquare is making great strides toward leveraging the location of its users in order to serve relevant advertisements.

Foursquare, which helps groups of friends find local places to hang out, recently partnered with Verizon FiOS. The partnership is part of a larger arrangement: namely, Verizon’s $1 billion partnership with the NFL. Foursquare users in the Washington, D.C., Boston, and Baltimore areas will now start seeing location-based FiOS ads featuring the areas’ local teams. It’s a great indication of what is possible when advertisers reach out to specific demographic segments. Taking inspiration from the deal, more East Coast teams are expected to be added shortly.

Social advertisements are here to stay, but there’s quite a lot of evidence to suggest that advertisers don’t want to overstay their welcome. They’re creating higher quality content than ever before, and using some great tools to get it in front of the right eyes.

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